On 24th October 2013, the Bishop of Derby, the Rt Revd Alastair Redfern, received an answer to a written question on the development of credit unions.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): While the majority of credit unions are not providing direct competition to payday lenders, credit unions are increasingly helping members who have become trapped with payday loans, offering them a way to consolidate and escape from the high interest rates, spreading out their debts over a longer, more affordable period.
Government has committed investment of up to £38 million in credit unions — to increase access to affordable credit for at least 1 million more people and save consumers up to £1 billion in loan repayments by March 2019.
We are also changing the maximum interest rate credit unions can charge per calendar month from 2% to 3%, coming into force on 1st April 2014.
This will enable credit unions to break even on their smaller, most expensive to issue loans, and to become more stable over the long term. This will give low income consumers greater access to reliable, affordable credit, without having to resort to more expensive means, such as home credit or payday lenders.